Correlation Between Park Ohio and Clover Leaf

Can any of the company-specific risk be diversified away by investing in both Park Ohio and Clover Leaf at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Park Ohio and Clover Leaf into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Park Ohio Holdings and Clover Leaf Capital, you can compare the effects of market volatilities on Park Ohio and Clover Leaf and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Park Ohio with a short position of Clover Leaf. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Ohio and Clover Leaf.

Diversification Opportunities for Park Ohio and Clover Leaf

0.62

Correlation Coefficient

Park Ohio  Clover Leaf

Poor diversification

The 3 months correlation between Park and Clover is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Park Ohio Holdings and Clover Leaf Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clover Leaf Capital and Park Ohio is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Park Ohio Holdings are associated (or correlated) with Clover Leaf. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clover Leaf Capital has no effect on the direction of Park Ohio i.e., Park Ohio and Clover Leaf go up and down completely randomly.

Pair Corralation between Park Ohio and Clover Leaf

Given the investment horizon of 90 days Park Ohio is expected to generate 2.59 times less return on investment than Clover Leaf. But when comparing it to its historical volatility, Park Ohio Holdings is 1.11 times less risky than Clover Leaf. It trades about 0.03 of its potential returns per unit of risk. Clover Leaf Capital is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,043  in Clover Leaf Capital on September 17, 2024 and sell it today you would earn a total of  386.00  from holding Clover Leaf Capital or generate 37.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	71.66%
Values	Daily Returns

Park Ohio Holdings  vs.  Clover Leaf Capital

Park Ohio Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Park Ohio Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Park Ohio is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Clover Leaf Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clover Leaf Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Clover Leaf is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Park Ohio and Clover Leaf

The main advantage of trading using opposite Park Ohio and Clover Leaf positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Ohio position performs unexpectedly, Clover Leaf can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Clover Leaf will offset losses from the drop in Clover Leaf's long position.

The idea behind Park Ohio Holdings and Clover Leaf Capital pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.